U.S., Enforcing Cuba Curbs, Punishes Canadian Company

By DAVID E. SANGER

Published: July 11, 1996

WASHINGTON, July 10—
The Administration struck today for the first time against foreign companies operating in Cuba, informing the top executives and the biggest shareholders of a Canadian mining concern that they and their families will be barred from the United States, State Department officials said.

The action against the company, the Sherritt International Corporation, is the first application of the Helms-Burton law, which President Clinton, against the advice of many of his closest advisers, signed this year. It has raised a storm of protest throughout Europe and Latin America, and Canada has told its companies to ignore American threats and has warned it may retaliate with countersanctions.

A Sherritt official in Calgary, Alberta, said the company would continue investing in Cuba. "We are staying the course," a Sherritt vice president, Patrice Merrin Best, said in an interview with Reuters. About nine officials and large shareholders are thought to be involved.]

American officials in Washington said executives from telephone companies in Mexico and Italy would be informed in coming days that they will also be barred from visiting the United States and from sending their children to visit or study here.

While today's action seemed to represent a harder line by the Administration, behind the scenes the White House is debating whether to bow to the protests abroad by suspending enforcement of another provision of the law that could cost foreign companies hundreds of millions of dollars.

President Clinton faces a deadline of Monday to decide whether to allow American companies whose properties in Cuba were seized by the Government of President Fidel Castro to file suits in United States courts against foreign companies that are now using them.

The State Department spokesman, Nicholas Burns, said today that "there is a good deal of discussion about that issue" and that no decision had been made.

The issue is fraught with election-year risks.

Mr. Clinton signed the Republican-sponsored sanctions bill reluctantly in February after Cuban warplanes shot down two small civilian planes flown by an anti-Castro group based in Florida.

The economic isolation of Mr. Castro is an enormously charged issue within the Cuban-American community in Florida, an important state in the November presidential election, and political advisers of Mr. Clinton are urging him to take a hard line against companies doing business with Cuba.

But a hard line could also hurt Florida's economy. A coalition of Canadian church, labor and relief groups urged Canadian tourists today to boycott the state unless the United States relents on Helms-Burton. About two million Canadians travel to Florida each winter, spending about $1.3 billion.

Mr. Clinton's economic advisers, including Treasury Secretary Robert E. Rubin and the chairman of the National Economic Council, Laura D'Andrea Tyson, have made it clear that they are worried about retaliation against American companies.

"I have some real concerns about the extraterritorial application of American law," Mr. Rubin said in a telephone interview today from Texas, where he was reviewing border controls. "But you have to balance that with our interests in bringing pressure to bear on countries like Cuba and Iran. Over the next few days we're going to have to make some decisions."

Traditionally, the United States has been opposed to proposals that punish foreign companies as a way of pressing their governments to change national policy with what is called a secondary boycott. Washington vociferously argued against similar measures in the 1970's, when Arab nations boycotted companies that did business with Israel.

But Mr. Clinton has made clear in recent weeks that he will sign legislation penalizing companies that invest in Iranian or Libyan oil projects worth more than $40 million. Differing versions of the bill have passed the House and the Senate by overwhelming margins. That bill has also been the subject of enormous opposition in Europe, especially in France and Italy.

The Helms-Burton law, named for Senator Jesse Helms, Republican of North Carolina, and Representative Dan Burton, Republican of Indiana, was intended to drive foreign investors out of Cuba in an attempt to bring down the Castro Government, which is already starved of cash.

It requires the Administration to bar from the United States top executives and major shareholders -- and their families -- of companies found to be "trafficking" in American property confiscated by Mr. Castro in 1959, soon after he took power.

Sherritt International operates properties that were seized from the predecessor of what is now Freeport-McMoran a New Orleans-based mining concern.

The Mexican telephone company Grupo Domos and the Italian telecommunications holding company Societa Finanziaria Telefonica per Azioni, or STET, use properties that once belonged to the ITT Corporation.

[The Mexican Government said late Wednesday that it had sent a diplomatic note to the United States Government protesting the Helms-Burton law. "The Government asked the State Department to pass on its concern to the President of the United States and urge him to suspend the entry into effect" of provisions of the law, the Foreign Ministry said in a statement quoted by Reuters].

Under the law, the officials who received the State Department letters would be banned from entering the United States starting in 45 days. Canadian officials would not release their names, but the list was said to include a number of prominent British investors in the company.

"We're bracing ourselves for a torrent of criticism from our allies," said a senior State Department official. "It's going to be very messy."

While banning individuals from the United States is the major symbolic action in the law, the big money rests in the provision that allows American citizens to sue foreigners and foreign companies that "act to manage, lease, possess, use or hold an interest in" property confiscated by Cuba from people who are now American citizens. That includes many Cuban-Americans.

Several foreign governments have said they will challenge that provision in international tribunals, including the World Trade Organization, because it gives American courts the authority to seize assets of foreign comapnies for actions that took place beyond American borders.